How to Manage Large Investment Portfolios..!

How to Manage Large Investment Portfolios..!

High net worth investors (HNIs) looking for increasing customisation and personalisation, allocate a portion of their portfolio to portfolio management schemes.

1. What is a portfolio management scheme (PMS)?

Portfolio management scheme, popularly known as PMS, is a specialised investment vehicle for lump sum investments.

The portfolio manager invests the money in shares and other securities and manages the portfolio on behalf of the client.

2. What is the minimum amount which one can invest?

As per regulatory guidelines, the minimum starting amount in a PMS is Rs. 25 lakhs.

Investors can either write a fresh cheque of  Rs. 25 lakhs or transfer an existing portfolio with market value more than Rs. 25 lakhs.

There is no lock-in period in a PMS scheme, but PMS managers insist investors come with a time frame of atleast three (3) years.

3. What is the difference between a discretionary portfolio manager and a non- discretionary portfolio manager?

The discretionary portfolio manager individually and independently manages the funds of each client in accordance with the needs of the client.

The non-discretionary portfolio manager manages the funds in accordance with the directions of the client.

4. Where do the investments lie? Can I monitor them?

When you opt for a PMS scheme, a bank account and demat account are separately opened in your name & all investments are made in your name only.

Accordingly, any income or / dividend coming out of the investment made will also be credited in your bank account & the shares will be held in the demat account in your name.

As per the PMS agreement, the Power of Attorney (POA) for operating the bank & demat accounts will be with the portfolio manager.

Most portfolio managers give a user name & pass word which can be used to login into their website & see the portfolio statements.

As per SEBI instructions, a Portfolio Manager is required to furnish a performance report to their clients every 6 (six) months.

5. How are the fees charged for the PMSs?

The fees will be as per agreement between you & the Portfolio Manager.

The fees will be payable annually, depending on the growth and the value of the portfolio at the year end.

Src: Prashant Mahesh, ET

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